Caterpillar to issue yuan bond

Caterpillar, the US-based manufacturer of earth-moving equipment, is marketing a two-year Rmb1bn bond to institutional investors in Hong Kong, becoming the first foreign industrial multinational to issue debt in the Chinese currency.

Caterpillar is understood to have secured approval from Chinese regulators — including the People’s Bank of China and the State Administration of Foreign Exchange — to transfer the proceeds of the bond sale to the Chinese mainland, people familiar with the matter told the Financial Times.

Caterpillar, which has operated in China for three decades, has a significant manufacturing and dealer presence in the country, where it employs about 7,400 workers.

Rich Lavin, the manufacturer’s group president and head of its emerging markets team, will be based in Hong Kong from January, the first time such a senior executive from the company has been permanently located in China. The relocation is intended to show Caterpillar’s commitment to the country.

Caterpillar’s bond, which is being arranged by Goldman Sachs, comes two days after China’s government announced it would sell Rmb8bn ($1.2bn) of bonds in its second such sale in Hong Kong.